Accelerated Vesting
First see Vesting. Then shop at Sears. Or rather, Brooks Brothers. Then quickly put on that third piece from the three-piece suit and...
Okay, okay. Accelerated vesting just refers to the idea that highly favorable executive compensation often grants top execs forward vesting provisions in their stock options if they are either fired for reasons not entirely their fault, or if the company is bought and those execs might otherwise be fired and screwed out of the remaining n months of stock option vesting.
Example: An exec might have been granted 100,000 options with a 4-year vest. She worked at the company for two years, at which point it is sold. The exec would then have 24 months to vest into the remaining 50,000 options...but the new company doesn't need her and would normally just fire her. However, because she has accelerated vesting in her contract, she vests forward one year upon firing so that she can at least recover 25,000 of the 50,000 she'd otherwise leave on the table.
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Finance: What Is a Call Option?25 Views
finance a la shmoop. what is a call option? option? option, where are you? okay
yeah yeah. not phone options, call options. and a close but no cigar. a call option [man smokes in a tub of cash]
is the right to call or buy a security. the concept is easy the math is hard.
you think Coca Cola's poised for a breakout as they go into the new low
calorie beverage business. their stock is at 50 bucks a share and you can buy a [man stands on a stage as crowd cheers]
call option for $1. well that call option buys you the right
to then buy coke stock at 55 bucks a share anytime you want in the next
hundred and 20 days. so let's say Coke announces its new sugarless drink flavor
zero it's two weeks later and the stock skyrockets to fifty eight dollars a
share. you've already paid the dollar for the option now you have to exercise it. [man lifts weights]
so you buy the stock and you're all in now for fifty five dollars plus one or
fifty six bucks a share and your total value is now fifty eight bucks. well you
could turn around today and sell the bundle that moment, and you'll have
turned your dollar into two dollars of profit really fast. and obviously had the [equation on screen]
stock not skyrocketed so quickly well you would have lost everything. still you
lucked out and now you're sitting on some serious cash, courtesy of your call [two men in a tub of cash]
options. as for Coke flavor zero turned out to be nothing more than canned water.
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